Customer should decide service charge at restaurants: Centre
April 22, 2017The central government’s latest norms to hotels and restaurants have suggested leaving the "service charge" column blank and letting customers decide how much they want to pay. The consumer affairs ministry made a fresh pitch to end what it believes is an unfair practice.
The ministry came out with the new guidelines after receiving several complaints against the mandatory levying of service charge by hotels and restaurants. It also received reports that some hotels and restaurants were restraining customers from entering the premises if they were not agreeing to pay the service charge.
The government said that there is an inherent component of service in providing food and beverages and the pricing is expected to cover the service component along with goods. "It is only after completing the meal that the consumer is in a position to assess the quality of service and decide whether to pay a tip/gratuity and, if so, how much. Therefore, if a hotel/restaurant considers that the entry of a customer to a hotel/restaurant amounts to his/her implied consent to pay a fixed amount of service charge, it is incorrect," the guidelines said, adding that any transaction between the customer and the hotel or restaurant staff is a separate one and paying any tip is a customer's discretion.
The ministry has invoked the mandate given to it under the Consumer Protection Act to issue the guidelines and gave a warning that charging customers for anything other than food and beverages "would amount to unfair trade practice" under the law.
Leaving the service charge column blank is a practice across many major cities across the globe. The fresh guidelines may be an interim arrangement and consumers can cite this if they file any case in a consumer forum. Once the central consumer protection authority comes into existence under the new consumer protection law, it can directly investigate any such unfair trade practice and can even order penal action.
The ministry came out with the new guidelines after receiving several complaints against the mandatory levying of service charge by hotels and restaurants. It also received reports that some hotels and restaurants were restraining customers from entering the premises if they were not agreeing to pay the service charge.
The government said that there is an inherent component of service in providing food and beverages and the pricing is expected to cover the service component along with goods. "It is only after completing the meal that the consumer is in a position to assess the quality of service and decide whether to pay a tip/gratuity and, if so, how much. Therefore, if a hotel/restaurant considers that the entry of a customer to a hotel/restaurant amounts to his/her implied consent to pay a fixed amount of service charge, it is incorrect," the guidelines said, adding that any transaction between the customer and the hotel or restaurant staff is a separate one and paying any tip is a customer's discretion.
The ministry has invoked the mandate given to it under the Consumer Protection Act to issue the guidelines and gave a warning that charging customers for anything other than food and beverages "would amount to unfair trade practice" under the law.
Leaving the service charge column blank is a practice across many major cities across the globe. The fresh guidelines may be an interim arrangement and consumers can cite this if they file any case in a consumer forum. Once the central consumer protection authority comes into existence under the new consumer protection law, it can directly investigate any such unfair trade practice and can even order penal action.
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